It is little secret that the Russian economy is in trouble due to unnecessary US-led sanctions. Versus the dollar, the Russian ruble has lost half of its value. Numerous factors have contributed to the fall of the ruble, including a strengthening dollar and declining oil prices.

In 2014 alone, the ruble lost a quarter of its value. Due to their actions in the Ukraine, Russia has been under fire with economic sanctions from the US as well as the EU. As the Ruble continues to tumble, an increasing number of Russians have begun to consider bitcoin. In response, the Russian Ministry of Finance announced a bill to ban "quasi-money," last year.

To make matters worse, it is reported that the Russian Duma is placing a ban on the circulation of the United States dollar in Russia. Perhaps it's just tit for tat for what's been going on between the US and Russia since the Syrian crisis and the fact that the US has been encroaching on ex-USSR territories for some time, and might I add, unnecessarily. 

In the event that the bill is approved, citizens in Russian will be allowed up to one year in order to close dollar accounts in Russian banks and exchange any dollars they hold for rubles. Given the country's current economic environment, Russians have begun to seek alternative options for converting their funds into more stable currencies, regardless of Russia's ban on cryptocurrencies.

Popularity of bitcoin on the rise in Russia

Despite the government's efforts to put a stop to bitcoin in Russia, the cryptocurrency still has an avid fan base. A Bulgaria-based exchange known as BTC-e is currently the most popular such exchange amongst Russians. BTC-e makes it possible for users to exchange their rubles for bitcoin on a website that is available in Russian as well as English and Chinese.

In an effort to thwart the attempts of Russians to convert their rubles into bitcoin, the Russian government has also taken steps to block several websites it claims are associated with bitcoin and what the government has termed as a shadow economy. Among the sites blocked by the Russian government include BTCsec.com, Bitcoin.it, Bitcoin.org, Coinspot.ru, and Indacoin. Currently, BTC-E.com continues to operate in Russia. According to the Nevyansky court, the court responsible for making decisions regarding the blockage of bitcoin sites, those websites are in violation of a law that makes the ruble Russia's official national currency, a law that was passed in 2002. The Finance Ministry is also currently considering implementing fines against Russian citizens who use digital currencies such as bitcoin. Such fines could amount to 50,000 rubles for individuals, the equivalent of $1,300 and as much as a million rubles, the equivalent of $25,000 for legal entities.

Future of bitcoin in Russia

When it comes to the future of bitcoin in Russia, the Central Bank has a far more liberal approach. Even the first deputy chairman has indicated that there could be a future for such virtual currencies, but went on to say that any such future would only be with regulated usage. To date, there has been no indication exactly how bitcoin might be controlled in Russia.

Russia may also be reconsidering its current ban on virtual currencies, such as bitcoin. Currently, the Russian Ministry of Economic Development has yet to approve the draft law, meaning that the law could require major revision. While it seems as though the Russian government is not keen to make such a move due to a desire to provide more freedom, but because failure to do so could affect the ability of companies in Russia to attract new business. Although the bill may well be revised, it is likely that any revisions will be designed to benefit corporations while still restricting the ability of Russian citizens to use virtual currencies. Even so, there was recently nearly a 250 percent increase in transaction volume involving ruble and bitcoin, indicating that while virtual currencies may still be illegal, Russian citizens are still enamored.